After Hours Summary: NFLX +10%, ETH -4%, SCSS -3.5% following earnings/guidance, NVAX +8% ahead of vaccine update, PBYI +7% on breast cancer drug approvalAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: NFLX +10.4%, BRO +2.8% (light volume), ELS +1.8% (ticking higher)
Companies trading higher in after hours in reaction to news: NVAX +7.9% (to host RSV F vaccine update conference call on July 24), PBYI +7.4% (receives FDA approval for NERLYNX/neratinib in early stage HER2-overexpressed/amplified breast cancer), RAD +6.1% (Rite Aid provides supplemental information on impact from Walgreens Boots Alliance Asset Purchase Agreement in response to a number of investor inquiries), PRTK +5.8% (announces 'positive' top-line results from a pivotal Phase 3 clinical study comparing omadacycline to twice-daily oral linezolid in the treatment of acute bacterial skin and skin structure infections), EGLT +4.9% (Highbridge Capital discloses 9.58% passive stake), ARNA +2.2% (still checking), LMT +0.8% (ahead of earnings tomorrow before the open; also Kaman Aerospace Corporation entered new multi-year contract with Lockheed Martin's Sikorsky)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: PLG -22.3% (thinly traded; also updates outlook and financing), FND -5.5% (offers prelim Q2 results and launches proposed secondary offering of 9 mln shares of common stock by stockholders), ETH -4.3% (comments on business in advance of investor meeting; sees Q4 adj EPS of $0.41-0.42 vs $0.50 estimate and retail written orders +1.9%), SCSS -3.5%, NLY -2.7% (to offer 60 mln shares of common stock in underwritten offering; updates Q2 guidance)
Companies trading lower in after hours in reaction to news: REI -5.2% (to offer shares of common stock in an underwritten public offering), VNOM -5.2% (Viper Energy Partners' subsidiary of Diamondback Energy commences offering of 11 mln common units representing limited partner interests), CBAY -4% (announces 10 mln share secondary offering), AUPH -3% (reliquishing Monday's gains related to anticipated appearance of CEO on MadMoney)
Asia Mid-Session Market Update: PBOC affirms monetary policy to be prudent and neutral; RBA minutes spike the Aussie, while dollar weakens on continued healthcare delays
***Asia Summary***
- Markets were broadly weaker today, US Republican Senators Moran and Lee say to vote NO on Senate Healthcare bill, thislatest opposition to the measure signals that the Republicans might not be able to pass the revised healthcare bill. The White House called for Congress to continue to work on health bill, as inaction is not an option. EUR/USD rose to 1.1537, attributed to how lack of a health care deal could delay Congress’ next action on the debt ceiling.
- RBA meeting minutes showed that the board spent some time discussion the neutral interest rate, noting that it equated to a neutral nominal cash rate of around 3.5%. It also argued that estimates of the neutral real rate suggested that monetary policy had been clearly expansionary for the preceding five years or so. Also noted that recent Govt budgets suggest fiscal policy will be more expansionary in 2017/18 than had previously been expected. Infrastructure investment was expected to have significant positive spillovers to other parts of the economy. Also see some probability of an increase in the cash rate by mid-2018. AUD/USD rose to 0.7887 on the more hawkish view.
- Rio Tinto reported its Q2 production data, coming in slightly lower y/y and lower than expected, also cut FY17global iron ore shipments by ~20Mt to 330Mt. Coal guidance also was cut after Cyclone Debbie closed down production for many of the miners. In China property prices rose in June for all 70 cities y/y. New home prices fell in Beijing, Shanghai and Shenzhen m/m but all rose y/y.
***Key economic data***
- (NZ) NEW ZEALAND Q2 CPI Q/Q: 0.0% V 0.2%E; Y/Y: 1.7% V 1.9%E
- (CN) CHINA JUN PROPERTY PRICES M/M: RISE IN 60 OUT OF 70 CITIES VS 56 PRIOR; Y/Y: RISE IN 70 OUT OF 70 CITIES V 69 PRIOR
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 112.5 v 113.0 prior
- (AU) AUSTRALIA JUN NEW MOTOR VEHICLE SALES M/M: 1.2% V 2.9% PRIOR; Y/Y: 3.6% V 4.9% PRIOR
- (NZ) New Zealand RBNZ Q2 Sectoral Factor Model Inflation Index y/y: 1.4% v 1.5% prior (1st slowdown since Q3 2015)
- (NZ) New Zealand Q1 CoreLogic House Price Index y/y: 10.2% v 13.9% prior
***Speakers and Press***
China
- (CN) China's State Planner (NDRC) to allow 200M tons of new coal capacity to be launched in 2017, to keep coal prices in a reasonable range
- (CN) China’s National Development and Reform Commission (NDRC) Yan: Companies should be prudent in their outbound investment decisions
- (CN) China PBOC affirms monetary policy to be prudent and neutral; to strengthen macro-prudential management and counter cycle adjustments
Australia/New Zealand
- (AU) Australia ACCC releases report on private health insurer; Continues to focus on consumer issues in private health insurance as one of its priority areas in the 2017 Compliance and Enforcement policy
Korea
- (KR) According to Barclay's South Korea's hourly minimum wage hike may push up inflation expectations, which could potentially bring forward any decision by the Bank of Korea to raise the policy interest rate
Japan
- (JP) Bank of Japan (BOJ) bond buying said to raise concerns among some officials
- (JP) Japan Fin Min Aso: No change to FY20 primary balance surplus goal
***Asian Equity Indices/Futures (00:30ET)***
- Nikkei -0.5%, Hang Seng -0.1%, Shanghai Composite -0.6%, ASX200 -1.2%, Kospi -0.1%
- Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax -0.2%, FTSE100 -0.3%
***FX ranges/Commodities/Fixed Income (00:30ET)***
- EUR 1.1538-1.1472; JPY 112.66-111.99; AUD 0.7904-0.7787; NZD 0.7347-0.7263
- Aug Gold +0.3% at 1,236/oz; Aug Crude Oil +0.2% at $46.09/brl; Sept Copper +0.04% at $2.73/lb
- (AU) Australia sells A$150M in indexed bonds, avg yield 1.1158%, bid to cover 3.57x
- (CN) China PBoC OMO: injects CNY200B in 7 and 14 day reverse repos v CNY170B prior
- USD/CNY (CN) PBOC SETS YUAN REFERENCE RATE AT 6.7611 V 6.7562 PRIOR
- (NZ) New Zealand sells NZ$100M in 3-month bills; avg yield 1.785%
***Equities notable movers***
Australia
- Village Roadshow, VRL.AU Guides FY17 Adj Net profit A$20-23M v A$24Me; Expects to record Wet'n'Wild impairment A$65M pre-tax; Narrows lower FY17 theme park adj EBITDA A$55M (prior A$55-65M); -0.5%
-Rio Tinto, RIO.AU Reports Q2 global iron ore production 79.8Mt v 85.30Mt y/y; Shipments 77.7Mt v 81.8Mte; -1.5%
Hong Kong/China
-Sunac China Holdings, 1918.HK Domestic banks are said to be reviewing its credit risk following a deal to buy assets from Dalian Wanda Group; -10.4%
South Korea
-Hanssem, 009240.KR Reports Q2 (KRW) Op 33.7B v 30.6B y/y; Rev 481.8B v 434.9B y/y; -7.1%
Japan
-Toshiba Corp, 6502.JPJudge delays ruling on Western Digital’s attempt to block chip unit sale, new target of closing sale of chip unit by end of March; +8.3%
***US markets on close: Dow -0.04%, S&P500 0.0%, Nasdaq +0.03%, Russell +0.2% ***
- Best Sector in S&P500: Utilities
- Worst Sector in S&P500: Healthcare
- Biggest gainers: FCX +3.2%; M 3.1%; KSS +2.7%
- Biggest losers: CCI -4.2%; BLK -3.1%; SIG -2.2%
- At the close: VIX 9.82 (+0.31pts); Treasuries: 2-yr 1.36% (+0.3%), 10-yr 2.31% (-0.2%), 30-yr 2.90% (-0.3%)
***US Market Summary***
- Stocks closed mostly flat on the day while investors appeared to be on the sidelines as the market awaits the starting pistol of earnings season. Volume was on the low side, 23% and 19% below the 3-month average for the NYSE and Nasdaq respectively. Best performing sectors in the S&P were utilities, gaining 0.4%, with Real Estate and Consumer Discretionary both rising 0.2%.
- (US) Treasury markets were choppy today, finally giving way to a rally in prices as yields fell. 10-year yield dropped 2 bps on the day to 2.31%, and 30-year yield lost as much as 4 bps at one point before closing higher at 2.90%. 10s30s spread widens to 59 bps.
***US Afterhours Movers***
- NFLX Reports Q2 $0.15 v $0.16e, Rev $2.78B v $2.76Be; Guides Q3 $0.32 v $0.22e, total Rev $3.0B v $2.88B, total streaming Rev $2.9B, domestic streaming Rev $1.6B, international streaming Rev $1.3B; net operating margin 6.9%; Guides Q3 total streaming net adds 4.4M, domestic streaming net adds 0.8M, international streaming net adds 3.7M; +10.7% afterhours
-PBYI FDA grants approval for Nerlynx for the extended adjuvant treatment of early-stage, HER2-positive breast cancer; +7.4%
Closing Market Summary: Equities Finish Flat on MondayThe equity market opened the week with a sleepy, range-bound performance that left the major averages little changed from where they closed on Friday. The S&P 500 and the Dow finished just a tick below their flat lines while the Nasdaq eked out a narrow victory.
Sector movement was very modest as market-moving headlines were few and far between. Seven groups advanced--technology (unch), consumer discretionary (+0.3%), utilities (+0.4%), consumer staples (+0.1%), real estate (+0.2%), telecom services (+0.2%), and materials (+0.2%)--and four groups declined--financials (-0.1%), health care (-0.3%), industrials (-0.1%), and energy (-0.2%).
The influential health care sector struggled following weekend reports that the Senate will delay a vote on health care reform, which was originally scheduled for this week, and ahead of tomorrow morning's earnings reports Johnson & Johnson (JNJ 132.15, -0.45) and UnitedHealth (UNH 186.35, -0.55).
Meanwhile, the consumer discretionary group outperformed, thanks in large part to retailers, which pushed the SPDR S&P 500 Retail ETF (XRT 40.22, +0.36) higher by 0.9%. Amazon (AMZN 1010.04, +8.23) also exhibited relative strength, adding 0.8%, after the company's target price was raised to $1,200 at UBS.
Outside of the equity market, select safe-haven assets, including gold and U.S. Treasuries, ticked up on Monday; gold advanced 0.5% to $1,234.00/ozt while the benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, slipped three basis points to 2.31%.
In addition, the CBOE Volatility Index (VIX 9.87, +0.36), which is used to gauge investors' anticipation of short-term volatility, jumped 3.7%. However, it's important to note that, despite today's advance, the VIX remains at a historically-low level.
Reviewing today's economic data, which was limited to the Empire Manufacturing Survey for July:
- The Empire Manufacturing Survey for July fell to 9.8 from the prior month's reading of 19.8. The consensus estimate was pegged at 13.0.
On Tuesday, investors will receive several economic reports, including June Export/Import Prices at 8:30 ET, the July NAHB Housing Market Index (consensus 67) at 10:00 ET, and July Net Long-Term TIC Flows at 16:00 ET.
Early premarket gappers
Gapping up:
- ACRX +16.7%, MDGS +11.8%, BGC +3%, WB +2%, SPWR+1.5%, AAOI +1.4%, FEYE +1.4%, GOLD +1.3%, CTIC+1.1%, CORI +1.1%, NFLX +0.9%, VRX +0.6%, JD +0.6%
Gapping down:
- RPRX -48.2%, VHC -21.7%, TXMD -11.2%, RRD -3.8%,YNDX -1%, SHPG -1%, LPSN -0.9%, MU -0.8%, XPO-0.7%, CLLS -0.6%
Procter & Gamble: Trian Fund Management confirms filing a preliminary proxy statement for the election of Nelson Peltz to P&G’s Board of Directors at the 2017 Annual Meeting of Shareholders
As one of P&G's largest shareholders, and given P&G's disappointing results over the past decade, Trian has a keen interest in helping the Company address the challenges it is facing.. Trian has made the decision to nominate Mr. Peltz for election to the Board at the 2017 Annual Meeting so that he can act as a catalyst for faster and more significant change at P&G. In connection with this nomination, Trian has filed a preliminary proxy statement with the SEC and launched the website www.RevitalizePG.com, which contains a brief shareholder presentation and other materials.
The debate over the role robots will play in the future of warfare is one that is taking place right now as the development of automated lethal technology is truly beginning to take shape. Predator drone style combat machines are just the tip of the iceberg for what is to come down the line of lethal weaponry and some are worried that when robots are calling the shots, things could get a little out of hand.
Recently there has been some debate at the U.N. about “killer robots,” with prominent scientists, researchers, and Human rights organizations all warning that this type of technology – lethal tech. that divorces the need for human control – could cause a slew of unintended consequence to the detriment of humanity.
A study conducted the University of British Columbia shows that this type of terminator-like weaponry isn’t sitting well with the general public, as an overwhelming majority of people, regardless of country or culture, want a complete ban placed upon any further development of these autonomous systems of war.
Despite the warnings of risk and concern, this is not stopping arms manufacturers from taking warfare into the twilight zone and bringing the futuristic battlefield scenario where A.I. robots and human are fighting with each other, side by side, closer to everyday reality.
Kalashnikov, the maker of the iconic AK-47, is one of those manufacturers bringing lethal automation and robotics into the present-day as it is currently building a range of products based on neural networks,’ including a fully automated combat module’ that can identify and shoot at its targets.
Defense One is reporting:
The maker of the famous AK-47 rifle is building “a range of products based on neural networks,” including a “fully automated combat module” that can identify and shoot at its targets. That’s what Kalashnikov spokeswoman Sofiya Ivanova told TASS, a Russian government information agency last week. It’s the latest illustration of how the U.S. and Russia differ as they develop artificial intelligence and robotics for warfare.The Kalashnikov “combat module” will consist of a gun connected to a console that constantly crunches image data “to identify targets and make decisions,” Ivanova told TASS. A Kalashnikov photo that ran with the TASS piece showed a turret-mounted weapon that appeared to fire rounds of 25mm or so.
Defense One points out that in 2012 then-Deputy Defense Secretary Ash Carter signed a directive forbidding the U.S. to allow any robot or machine to take lethal action without the supervision of a human operator.
Then in 2015, then-Deputy Defense Secretary Bob Work said fully automated killing machines were un-American.
“I will make a hypothesis: that authoritarian regimes who believe people are weaknesses,” Work said, “that they cannot be trusted, they will naturally gravitate toward totally automated solutions. Why do I know that? Because that is exactly the way the Soviets conceived of their reconnaissance strike complex. It was going to be completely automated. We believe that the advantage we have as we start this competition is our people.”
According to Sergey Denisentsev, a visiting fellow at the Center For Strategic International Studies,Russian weapons makers see robotics and the artificial intelligence driving them as key to future sales to war makers.
“There is a need to look for new market niches such as electronic warfare systems, small submarines, and robots, but that will require strong promotional effort because a new technology sometimes finds it hard to find a buyer and to convince the buyer that he really needs it, ” Denisentsev said earlier this year.
With my previous reporting dealing with robotics and war, I always point out the incredible advances made by Softbank owned Boston Dynamics in the field of A.I., using it as an example of what future warfare could (or most likely will) look like it. And to be honest, it really is nightmarish.
The bottom line is war is a racket. Killing for political reasons is always disastrous. So the fact that governments are on the verge of possessing this terminator technology should send chills down everyone’s spine.
Think Tank: Consumers Are Pushing the Retail Industry Forward
Brand-building specialist Ryan Patel explains.
Since 2013, this initiative by H&M has amassed more than 39,000 tons of collected garments, which equates in fabric to 196 million T-shirts. Although this initiative has not been heavily marketed by H&M, many of their consumers are in the know about this initiative and appreciate the brand’s commitment to reducing their green imprint.
Empower the Consumer
The word “empower” typically arises when leaders need to embed it within their organization in order to succeed. Companies spend a tremendous amount of time figuring out how to empower its employees, but many forget the consumer can be empowered by the brand. Speaking technically, consumers are actually no different when it comes to brand empowerment. There must be a feedback mechanism that creates a two-way dialogue that is always available and trusted by the consumers. Only then will retailers have the undivided attention and loyalty through its ups and downs.
Consumers want to be involved with the brand and even part of the brand’s decision process (such as suggesting color options, marketing new events, or choosing a brand spokesperson) — no matter how small of a role. This onset of the empowered consumer is a shift in mentality within the market where every voice matters and these voices could provide large dividends to companies that embrace and support these consumers. With feedback and comments delivered instantly via social media today, consumers feel they can be heard and are more likely to engage with companies than before.
With that said, there is a large opportunity for many retailers, especially the ones struggling, to reach and engage its core audience of consumers to enhance its campaigns, products and strategic direction. But this takes a full commitment from all within the organization, typically driven by the company culture, in which consumers can help support and drive, as well.
Personalized Experience
There has been a tremendous amount of competitive pressure on retailers to enhance customer experience. One arena that has been a recent focus is on the evolution of predictive technology. It has become very apparent with all the data that is shared today: an automated and personalized experience can be achieved by retailers in-store and online alike. The retail industry, especially the fashion industry, can create an ideal consumer interaction, such as by suggesting outfits and clothing for a company’s upcoming fashion season just in minutes now online.
Companies can also tailor an experience to each individual by collecting behavioral data. As more retailers collect personalized data of its consumers, a larger demand will emerge to have a personalized experience in other categories, such as visits to stores to customer service. For example, we are starting to see this with Amazon and its fashion products. Amazon has begun testing its Prime Wardrobe initiative, where consumers can “try before you buy” to ensure the consumer is fully satisfied with the wardrobe.
However, when it comes to collecting personalized data, there will still be a need for balance and transparency with how companies are gathering information on its consumers. Consumers’ privacy is a very sensitive and critical issue. Many consumers will leave brands, if they felt their privacy has been infringed upon.